2013.06.1500:43:59UTC+00Canadian Dollar soar to its peak level in a month on rate-rise speculation

The Canadian dollar reached the highest in a month against its U.S. counterpart as oil, the nation’s biggest export, bolstered and investors bet stronger economic data may convince the Bank of Canada to increase interest rates.

The currency fluctuated versus the U.S. dollar as Canadian factory sales unexpectedly decline in April. Canada’s dollar uptrend for the second week after the nation recorded its strongest job gains in more than a decade last month and home construction boost the most in 13 months, driving expectations to the highest in more than a year the Bank of Canada will raise rates.

Oil, Bonds

Futures on crude oil jumped 1.1 percent to $97.79 per barrel in New York. The discount Canada faces for its oil compared to U.S. benchmarks widened to $10.25 per barrel after reaching its narrowest in nine months on June 12.

‘Good Fundamentals’

“I’m lining up the Canadian dollar against euro zone economies, against other G10 economies, and generally speaking Canada can still boast a decent amount of good fundamentals,” said Jane Foley, senior currency strategist at Rabobank International by phone from London. “The ultra-bearish view has certainly taken a big knock, but I think in order to dismiss it entirely we have to wait until we see improved U.S. data.”

Canadian manufacturing sales dropped 2.4 percent to C$48.2 billion ($47.4 billion), Statistics Canada said in Ottawa, while inventories rose to the highest in records dating to 1992. Economists surveyed by Bloomberg forecast sales would rise 0.3 percent. A separate report showed wholesale.

Consumer confidence in the U.S. fell to 82.7 in June from a six year high of 84.5 the prior month, according to the Thomson Reuters/University of Michigan index.

Implied volatility for three-month options on the Canadian dollar versus its U.S. counterpart traded at 7.20 percent, its lowest point since May 17. Implied volatility, which traders quote and use to set option prices, signals the expected pace of currency swings.

The Canadian dollar has declined more this week than the currencies of fellow commodity exporting countries among a basket of nine developed nation currencies tracked by the Bloomberg Correlation Weighted Index. The loonie has lost 0.98 percent compared to the Australian dollar’s 0.4 percent loss and the New Zealand currency’s 0.92 percent gain.